Oil prices could resume rising in 2023 as Chinese demand recovers from the lifting of Covid-19 restrictions and a lack of investment limiting supply growth, OPEC officials told Archyde.com, a number higher noting a possible return to 100 dollars per barrel, writes News.ro.
oil probePhoto: Charlie Riedel/AP/Profimedia
In 2022, oil prices topped $100 a barrel for the first time since 2014 as demand recovered following the lifting of Covid-19 restrictions across much of the world and Russia’s invasion of Ukraine heightened supply concerns.
But the price of Brent crude ended the year close to $86 a barrel, due to fears of a global recession.
A return to oil prices above $100 a barrel for a prolonged period would bring more income for OPEC members, whose economies depend largely on oil revenues, and would be a setback for industrialized economies trying to control inflation and interest rates.
To support the market, the alliance between the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, agreed in October to cut production by 2 million barrels a day, or about 2 percent of global demand.
After volatility in 2022, which took Brent near an all-time high of $147 a barrel shortly after the start of the war in Ukraine, Brent rose slightly in 2023 to just above $86, helped by the plan Russia to reduce production in March.
OPEC and OPEC+ do not publish oil price forecasts and do not have a price target.
OPEC and OPEC+ officials and ministers are often reluctant to discuss price direction.
In rare public comments on February 8, Iran’s national representative to OPEC, Afshin Javan, said oil prices could return to around $100 in the second half of the year, adding that OPEC+ would likely maintain its current policy of production at its next meeting.
“The shadow of the energy crisis will continue to dominate the world and the general trend of global oil prices is increasing”
Archyde.com spoke privately with five more OPEC officials about the prospect of oil prices reaching $100 a barrel.
Of these, three thought the price of oil was more likely to rise in 2023 than fall, and two predicted that prices would return to $100 a barrel.
“It must be said that the shadow of the energy crisis will continue to dominate the world and the general trend of global oil prices is increasing. In my view, a return of Brent crude to above $100 at some point in 2023 would not be unexpected,” said one of the OPEC sources.
The industry consensus is currently for lower prices than in 2022. A Archyde.com poll of 30 economists and analysts expects Brent oil prices to average $89.37 a barrel in 2023, down from $99 dollars in 2022.
Goldman Sachs reduced its forecast for the price of Brent oil in 2023 to $92 per barrel.
China’s sudden lifting of Covid restrictions is likely to boost oil demand growth in 2023 after the country was forecast to post a small decline in 2022 for the first time in years.
OPEC sources also anticipate that a lack of investment will cause insufficient supply to sustain price increases.
OPEC members are pumping nearly 1 million barrels a day less than their target, according to the group’s own figures and other estimates.